It Was A Terrible, Horrible, Awful Economic Time in the U.S.

Walk with me as we think back to a rather unpleasant economic time here in the United States.  Virtually a million people all stopped working, looking for work or lost their full time jobs in a single month.  Factory orders dropped monthly over 5% month-after-month-after-month-after-month . . ..  Countries around the world were suffering equal or worse economic demise, unable to pay their staggering debts and with vast unemployment exceeding 25% in numerous places and over 50% for the young and eager to work.  The economic bastions of old were virtually all in decline and struggling to find answers.  The year - 2015.

The following link to an article by Lance Roberts is interesting as a whole but I focused on the second point about employment.  While part time employment went up in June nicely, full time jobs declined nearly 350,000 and a staggering 640,000 dropped out of the workforce altogether, which accounted for the lowering of the U-3 unemployment rate to 5.3%.  Yes, a dropping unemployment rate can be a bad thing if it is measured like U-3 is measured.

http://seekingalpha.com/article/3301655-3-things-valuations-employment-sectors?ifp=0&app=1

On the factory orders front, here is an interesting post on Seeking Alpha that is an eye-opener regarding factory orders.  They have been solidly in one direction this year - down.  Say what you want about other supposedly rosy numbers, if people ain't buyin' it they ain't buidlin' it and from these numbers, not much is being built.  Now this is in part due to inventory buildups in the rosier past of 2014, but reality should have set in for businesses long before now.  Down 8% in May and a six month average of down 5.5%.  This is consistently bad.

http://seekingalpha.com/article/3301425-factory-orders-fall-now-8-percent-economists-unconvinced

Now we just need to wait and see how long it takes the U.S. stock markets to start dealing with these realities.  They know the realities, but they also have ZIRP and lots of hedge funds soaking this rally for everything they can while they bow out (and short out).

Bush v. Clinton

There is a reasonable chance that next year we will see another Bush v. Clinton battle.  On the highly erroneous, not saying it is so, have absolutely no support for it, totally made-up, what if category of discussion, let me hypothesize that the present Bush and Clinton perform in the Oval Office similarly to their family members.  After all, Jeb is of the same blood as the other two and was raised by the same parents as W with likely similar values being instilled.  And Hill is - well - she does have the same last name and is married to the guy, so just play along and assume she performs like him (and I mean in the Oval Office, not the bedroom. Okay, okay, so he probably did that in the Oval Office too, but you know what I mean).  Assuming - and you know what it means to assume - that this is the case, let's look into the crystal ball and see what is in store.

Let's start with private sector employment, shall we.  The two Bushes were collectively in office 12 years.  They collectively added - drum roll please - 1,047,000 private sector jobs.  That is a whopping 87,250 jobs per year.  Billy, in eight years, did a little better, adding 20,957,000 private sector jobs, averaging 218,000 per month.  Just a sliiiiight difference here.

http://www.calculatedriskblog.com/2015/07/public-and-private-sector-payroll-jobs.html

Deficit

Now we are off looking at ye old deficit spending.  GHW added $1.554 trillion during his four years and his son W added a whopping $5.849 trillion, for a total over 12 years of $7.403 trillion, which is .617 trillion per year.  Bill added $1.396 trillion in his eight years, or .237 trillion per year. 

http://useconomy.about.com/od/usdebtanddeficit/p/US-Debt-by-President.htm

Keep in mind folks that his is a Bush vs. Clinton discussion, not a Republican vs. Democrat discussion.  If you want to go there, Democrats should not be getting on their high horse just yet as Obama has spent $6.167 trillion through 2014 and has another two years of damage to inflict.  And though Obama's job creation has been better than the two Bushes, me thinks the last year and a half of his second term could change that quite a bit.  And, let's not forget, his job creation has been meager at best anyway given it is virtually all low paying part time jobs.

 

Greece is Small Potatoes

Well, everyone seems to be so captivated with little old Greece that no one seems to have noticed a slightly bigger problem - China.  Let's compare.  Greece at the end of 2013 (and it has vastly slid downhill since) captured .30% of the world GDP.  China, just a tad more at 15.4%.  For you math whizzes in the audience, that puts China GDP at over 50 times that of Greece.  One might surmise from this that problems in China may mean a bit more to us here in the U.S. than problems in Greece.  Long term, problems in Greece could be the first domino in festering issues in the EU rearing their ugly head and that is the true danger there and eventually here as well, but for the immediate future, the second largest economy in the world deserves more focus.

And as I was thinking about China not getting the attention it deserves just yesterday, I saw two articles today on the very same point, including this one by Lance Roberts, who I like to follow in Seeking Alpha:

http://seekingalpha.com/article/3296315-chart-of-the-day-is-china-sending-a-warning?ifp=0&app=1

If you did not notice, China is officially in a bear market and, despite some strong government intervention this weekend in terms of a reduced rate and reserve requirements, it is still struggling this week.  It lost 5% yesterday and as I write is down at the start of Thursday, complete with a whole lot of volatility.

I will not drone on about all the problems China is facing, but suffice it to say it does not have a booming economy right now to save the day, so things are quite likely to get a whole lot worse before they get better.  Simply couple that with EU problems and a less than stellar economy in the U.S. to support its highly overvalued market and you get the picture.

Update 7.2.15

Over four hours of trading left for Friday in China and the Shanghai market is down another 5% already, bringing the total drop to more than 27% and counting.  Lots of bubbles around and China is the porcupine in the room.

Update 7.3.15

And here is Zero Hedge noting much of the same.  He gives nice specifics on government attempts to stop the slide, including suspending some short sellers, i.e. the only ones making money in China, and launching an investigation into suspicious and possibly illegal market manipulation - like everything was above board and not suspicious at all during the markets meteoric rise.  And I hope he is right in believing brokerages will not utilize the new margin lending process that allows investors to use their house as collateral.  They are letting investors now use their house to support margin buying - seriously!!?

http://www.zerohedge.com/news/2015-07-03/chinese-stocks-plummet-despite-government-threats-shorts-europe-lower-us-closed

And to put it in perspective, David Stockman notes that the Chinese stock market in the past three weeks has lost in value 10 times the entire GDP of Greece.  Referendum that.

http://davidstockmanscontracorner.com/chinese-stocks-just-lost-10-times-greeces-gdp/